STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, CONSTRUCTION )

)

Petitioner, )

)

vs. ) CASE NO. 83-886

)

DONALD G. HODGES )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held on July 20, 1983, in Orlando, Florida, before Arnold H. Pollock, Hearing Officer for the Division of Administrative Hearings. The issue involved was whether Respondent's license as a registered building contractor should be disciplined for violations of Florida statutes as alleged in the Administrative Complaint filed in this case.

APPEARANCES

For Petitioner: Douglas A. Shropshire, Esquire

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

For Respondent: Donald G. Hodges, pro se

1014 East Alfred Street Tavares, Florida 32778

BACKGROUND INFORMATION

Petitioner's Administrative Complaint, filed on February 21, 1983, alleges that Respondent made misleading and fraudulent representations with regard to the monies paid to him in his practice of contracting, in violation of Sections 489.129(1)(c) and 455.227(1)(a), Florida Statutes (1981)

Petitioner presented the testimony of William W. Duncan, M. Jeanette Porter and the Respondent, and Petitioner's Exhibits 1 through 4. Respondent also testified in his own behalf and introduced Respondent's Exhibits A and B.

FINDINGS OF FACT

1. At all times pertinent to the allegations herein, Respondent was a registered building contractor licensed under the laws of Florida under License No. RB 0033604.

   
   

2. During July, 1980, William Wheeler Duncan saw Respondent's advertisement in the newspaper and called him regarding the construction of a home to be financed under the Department of Housing and Urban Development's

   (HUD) FHA 235 program. As a result of this call, Respondent came to Mr. Duncan's home and, on July 21, 1980, they entered into a written contract for Respondent to build a home for Mr. Duncan for $35,000 on Lot 21, Sunset Street, Golden Heights subdivision, Mount Dora, Florida. That same date, Respondent took Mr. Duncan to look at that lot on which the house was to be built, and Mr. Duncan entered into a contract to buy the lot for $8,800 from Mr. Andrew Lenhardt, which Respondent witnessed. It was Mr. Duncan's understanding that the $35,000 contract price for the house covered the land as well--a package deal. In any case, Mr. Duncan gave Respondent a check that same day for $250 as a down payment, which check was subsequently deposited and the face amount taken from Mr. Duncan's account.

   
   

3. After about six weeks, during which time no construction was started, Mr. Duncan called Respondent, who advised him that all was well, that Mr. Duncan's loan had been approved, but that 235 funds were short. He assured Mr. Duncan that more was coming, however. Every couple of weeks or so thereafter, Mr. Duncan would call Respondent, who always told him no money was available yet. Finally, after several months of this, during which no work was done on the house, Respondent finally admitted to Mr. Duncan that no 235 funds ware available and he could not build the house. He stated he had lost a lot of money on several of these contracts he had entered into and he needed time to pay back the deposit. Mr. Duncan agreed to this.

   
   

4. After several more calls by Mr. Duncan to Respondent, over a several- month period, Respondent advised Mr. Duncan he would only pay back a portion of tile deposit since he had lost money on these transactions. Mr. Duncan neither agreed nor argued. In any case, as of the present date, Respondent has neither commenced construction nor refunded Mr. Duncan's deposit.

   
   

5. M. Jeannette Porter, Supervisor of the Orlando suboffice of HUD, whose duties include administering the FHA program for the immediate nine-county area, recalls that the 235 program which existed at the time in question called for all deposits and application fees to be returned if the loan is not approved. Here, a conditional commitment was issued for this property on October 17, 1980, but the funds for 235 loans, to be covered by this and other commitments, was never forthcoming. This was through no fault of either Mr. Duncan or Respondent, but was the result of factors within the United States Government's control. However, her office is not involved in dealings between the client and the builder.

   
   

6. Respondent does not contest any of the comments of Mr. Duncan and agrees that everything he says is true. However, he contends he had several contracts for 235 homes like this and as a result of FHA's inability to provided funds over an extended period at the time or to give him a straight answer to questions he posed to that agency, he lost a considerable amount of money.

   
   

7. He is currently holding Mr. Duncan's funds and the funds of others similarly situated. At the time in issue, he did not return the funds because

   (1) he did not then have the money; (2) it was his belief that he should not lose money because the Federal Government changes its mind; (3) he did all he could to see the house was built; and (4) he was advised by an acquaintance, a county court judge, not to return any funds unless told to do so by a court. He is prepared to return Mr. Duncan's deposit and those of the others if someone who has the authority to do so tells him to return it.

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.

   
   

9. Respondent is alleged to have violated Section 455.227(1)(a), Florida Statutes (1981), which states:

   
   

   1. The board shall have the power to revoke, suspend, or deny the renewal of the license, or to reprimand, cen- sure, or otherwise discipline a licen- see, if the board finds that:

      1. The licensee has made misleading, deceptive, untrue, or fraudulent representations in the practice of his profession;

         
         

         and thereby Section 489.129(1)(c), Florida Statutes (1981), by making misleading and fraudulent representations with regard to the monies paid to him in the practice of contracting.

         
         

10. Comparison of the allegations in the Administrative Complaint with the evidence presented at the hearing indicates that Petitioner is alleging a misrepresentation in that the transaction was contingent on buyer approval by FHA for financing. The only reference to a contingency due to FHA approval of financing is contained in the agreement between Duncan and Lenhardt for the purchase of the land. Respondent was only a witness to this agreement, and there is nothing in his agreement with Duncan that imposes a contingency. While the terms of payment refer to an FHA insured (loan) of $35,000 less 3 percent downpayment, the evidence shows that the loan was approved, so the contingency was met. There is a great difference between alleging merely FHA approval (which was granted) and FHA 235 financing becoming available. In any case, while the Administrative Complaint states that Duncan's application was never processed and Respondent has refused to return the deposit, failure to return the deposit, while perhaps subjecting Respondent to civil action to enforce its return, does not constitute misleading or fraudulent misrepresentations so as to support a finding of violation of the statutes as alleged in the Administrative Complaint.

    
    

11. If there was any misrepresentation by Respondent it was in his promises to first return all, and then return a part, of the deposit to Mr. Duncan. Mr. Duncan may have relied on these misrepresentations to his detriment, but there is no evidence he attempted to enforce his claim and was barred from doing so. However, it is very clear that these misrepresentations are not the ones alleged in the Administrative Complaint and cannot support a finding of culpability.

    
    

12. No doubt Respondent, who by engaging in a business for profit, assumes the risk of loss, appears here to be trying to shift that risk of loss in this case to Mr. Duncan. However, that does not constitute the making of misleading, deceptive, untrue, or fraudulent representations in the practice of contracting. It does constitute a civil dispute between parties to a contract for which another remedy is available in the courts.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That the Board enter a final order dismissing the Administrative Complaint. RECOMMENDED this 19th day of August, 1983, in Tallahassee, Florida.

ARNOLD H. POLLOCK

Hearing Officer

Division of Administrative Hearings 2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 19th day of August, 1983.

COPIES FURNISHED:

Douglas A. Shropshire, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Mr. Donald G. Hodges 1014 East Alfred Street Tavares, Florida 32778

Mr. James Linnan, Executive Director Construction Industry Licensing Board Department of Professional Regulation Post Office Box 2

Jacksonville, Florida 32202

Mr. Fred Roche, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 83-000886

Orders for Case No: 83-000886